TaxTMI 
TaxTMI 
2010 (1) TMI 649
X X X X Extracts X X X X
X X X X Extracts X X X X
....from 1-7-2003 to 31-3-2004. A penalty of Rs. One crore is imposed on the appellants under Section 78 of Finance Act, 1994 (the Act). Show cause notice decided by the impugned order had proposed the following : "(i) Service Tax amounting to Rs. 79,43,346/- on the gross amount of Rs. 15,95,08,866/- realized by them, for security services rendered for the period from 16th October 1998 to 31st March 2004, on which service tax has not been discharged, but has become payable under Section 68 of the Finance Act, 1994 as amended, should not be demanded under the provisions of Section 73(1)(a) of the said Act, invoking the extended period of limitation, and why it should not be recovered under Section 73(2A) of the said Act; (ii) An amount of Rs. 50,00,000/- already paid by the assessee should not be appropriated towards the demand of service tax mentioned supra; (iii) The other services i.e. providing Drivers, Nurse, Male Nurse, Loaders and Unloaders, Housekeeping, Receptionists, Operators, Cleaners, Office Assistants etc. should not be classified under "Business Auxiliary Services" on which service tax has been imposed from 1st July 2003 and why service....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e, they were not liable to pay service tax on the services rendered to various 100% EOUs as per CBEC Circular No. ST-56/5/03, dated 25-4-2003. The taxable value of the service had to be treated as inclusive of service tax and they were entitled to adjust accordingly. Providing drivers, nurses, receptionists, office assistants etc. were not liable to service tax under the category of 'Business Auxiliary Services'. The facts and circumstances of the case did not justify imposition of penalty or charging of interest. 3. In the appeal filed before us, it is submitted that in the present case, show-cause notice dated 6-10-2004 was issued under the provisions of Section 73 as they stood prior to 10-9-2004. The Tribunal in the case of Mahakoshal Beverages Pyt. Ltd. v. CCE, Belgaum [2007 (6) S.T.R. 148 (Tri. - Bang.)] held that the provisions prevalent on the date of show-cause notice were applicable to the proceedings and not substituted provisions. Similar view was held in Dutta Metal Industries v. CCE, Mumbai [2007 (217) E.L.T. 306 (Tri.-Mumbai)]; Hindustan Petroleum Corporation Ltd. v. CC, Visakhapatnam [2009 (243) E.L.T. 104 (Tri.-Bang.)]; Sky Industries Ltd. v. CCE, Mumbai-VI [200....
X X X X Extracts X X X X
X X X X Extracts X X X X
....bsp; Ispat Industries Ltd. v. CCE [2006 (199) E.L.T. 509 (Tri.-Mum.)] (ii) Secretary, Town Hall Committee v. CCE [2007 (8) S.T.R. 170 (Tri.-Bang.)] (iii) CCE v. Sikar Ex-Serviceman Welfare Coop, Society Ltd. [2006 (4) S.T.R. 213 (Tri. - Del.)] (iv) Haldia Petrochemicals Ltd. v. CCE [2006 (197) E.L.T. 97 (Tri. - Del.)] (v) ITEL Industries Pvt. Ltd. v. CCE [2004 (163) E.L.T. 219 (Tri.-Bang.)] It was evident from the above case law that such a bona fide belief was entertainable by the assessee. 3.3 The appellant had merely supplied manpower for the purpose of unloading, driving and performing functions of receptionist, etc. These activities rendered by the appellants constituted supply of manpower and could not be brought within the purview of 'Business Auxiliary Services'. The appellant did not undertake any commercial/marketing, customer care or any auxiliary services to their customers. It is further submitted that the amount received as consideration had to be considered as cum-tax value and the assessable value had to be computed by excluding the tax alleged to be payable. They relied o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ization relating to value of security service only. The show-cause notice invoked Section 73(1)(a) as it stood during the period prior to 10-9-2004. The appellant had filed returns for the period 10/98 to 3/02 on 18-4-2002. In such cases, provisions of erstwhile Section 73(1)(b) applied. The show-cause notice should have been issued within one year from the date of filing of the returns, within 18-4-2003. The show-cause notice issued on 6-10-2004 was time-barred. The appellant was under the bona fide belief that it was liable to pay service tax only when realized, that service tax had to be collected from their customers and then paid to the Government. The appellant deposited the service tax whenever they collected the tax from their customers. Non-payment of service tax was a bona fide error. Invocation of larger period of limitation was not sustainable. 3.7 There were errors in computation of tax based on the financial records of the assessee. The department had considered closing balance of Sundry Debtors Control Account for quantifying demand for 2004; in respect of other years, the closing balance was ignored. This had resulted in an inflated demand. 4. Durin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uments were not certified by the Chartered Accountant, instead the assessee themselves had signed the statements/calculation sheets. The Commissioner rejected the plea of the assessee that demand of the service tax could not be raised invoking provisions of Section 73 as it stood prior to 10-9-2004. He held that the demand did not suffer from any legal infirmity. 6.1 From the impugned order, we find that the departmental authorities gathered from the financial records of the assessee such as balance sheets, profit and loss accounts, ledger accounts, etc. that it had raised an amount of Rs. 15,95,08,866/- during 16-10-2002 to 31-3-2004 as charges for 'security services' rendered and that they had not paid tax due of Rs. 79,43,346/-. These details were not reflected in the ST-3 returns filed by the assessee. The assessee had rendered services like providing drivers, receptionists, loaders and unloaders, operators, nurse, male nurse, office assistants, housekeeping, etc. in respect of which it undertook billing/accounts which appeared to be classified under the category of 'business auxiliary service' during the period from 1-7-2003 to 31-3-2004 towards which it ha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssessable in any prescribed period has escaped assessment or has been under-assessed or service tax has been paid or has been short-paid or any sum has erroneously been refunded, he may in cases falling under clause (a), at any time within five years, and in cases falling under clause (b), at any time within one year, from the relevant date, serve notice on the person chargeable with the service tax which has escaped assessment or has been under assessed or has not been paid or has been short paid, or to whom any sum has been erroneously refunded, requiring him to show cause why he should riot pay the amount specified in the notice. Explanation - Where the service of the notice is stayed by an order or a court, the period of such stay shall be excluded in computing the period of five years or one year, as the case may be, under this section." At the time of issue of show-cause notice, Section 73(1) of the Act provided for demanding service tax not paid by suppression of facts, etc. This provision reads as follows : "73. (1) Where any service tax has not been levied or paid or has been short levied or short-paid or erroneously refunded, the Central Excise Officer ma....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eld that law applicable on the date of show cause notice had to be invoked. The show cause notice issued in that case invoking Rule 57-I was held to be not sustainable. We also note that Section 38A of Central Excise Act provides for protecting right acquired or liability incurred under any rule or notification or order made or issued under the Central Excise Act. This section was made applicable to Service Tax only in the year 2007. In any case, this section does not provide for protecting right accrued under a repealed provision of the Act. In the case of Sunrise Structurals & Engg. Ltd. & Ors. (supra), the Tribunal followed a judgment of the Bombay High Court in Standard Mills Co. Ltd. reported in [1998 (229) ITR 366] and held that the show-cause notice issued by the Central Excise Department demanding duty from the assessee was not a liability accrued to the assessee, till such time it was adjudicated and an order was passed on the said show-cause notice. Considering the same, it had to be held that the issuance of a show-cause notice was a mere hope or expectation of the department that some amount was payable by the assessee. Till such time an order was passed demanding the d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ce in relation to,- (i) Promotion or marketing or sale of goods produced or provided by or belonging to the client; or (ii) Promotion or marketing of service provided by the client; or (iii) Any customer care service provided on behalf of the client; or (iv) Any incidental or auxiliary support service such as billing, collection or recovery of cheques, accounts and remittance, evaluation of prospective customer and public relation services, and includes services as a commission agent, but does not include any information technology service." We find that the demand is under sub-clause (iv) of Section 65(19). This sub-clause refers to service such as billing, collection or recovery of cheques, accounts and remittance incidental or auxiliary to the other services enumerated in sub-clause (i), (ii) & (iii). In the instant case, the assessee provided personnel for carrying out the job of drivers, nurse, male nurse, loaders, receptionists, office assistants, etc. The assessee maintained accounts of salary, PF contribution, etc. on account of the personnel on its pay rolls. The ass....